Required Minimum Distribution Mistakes to Avoid
Traditional retirement accounts are tax-deferred, not tax-free. As baby boomers turn 70, they must soon begin mandated withdrawals and pay the taxes on the money they tucked into retirement accounts over several decades.
A required minimum distribution is the amount retirement account owners must withdraw from their IRAs and 401(k)s each year. When you take these withdrawals, you also have to pay taxes on each distribution. Retirement account withdrawals are required after age 70 1/2, except for Roth IRAs, which do not have distribution requirements for the original account owner.